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Captives Are Growing Rapidly for the Middle Market… but Why?

The captive industry has been around for at least 60 years and in that time has shifted as a tool for only the Fortune 500 to utilize, to a tool that is now being used for companies with as little as $10 million in annual revenues.

It all began with the structure of a “single parent” captive where one company would form their insurance company for the sole purpose of insuring their own risk. Typically, these firms will spend $3 million or more in annual insurance premium “spend” and the annual expenses of managing the captive insurance company would be $100,000 and up.

We then witnessed the emergence of “cell” insurance companies, which go by various names (sponsored cell, protected cell, Series LLC, rent-a-cell, etc.), but target companies with premium spend around the $1 million level and expenses that begin at around $35,000 per year to manage. Below the $1 million premium level, potential insureds are guided toward “group captives” and have an entry point as low as $100,000 in casualty spend.

Download the White Paper we created below to learn more about beginning a Captive program for your company.


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